Shark Ltd was running a financial business that involved two departments: one department insured risky loans, while the other department lent money. In September 2002, Shark Ltd received a report from its financial adviser that noted that its insurance departments may suffer a huge loss due to rising claims. The report was correct and Shark Ltd ended up paying a number of claims worth $10 million. In February 2003, Shark Ltd registered Safe Pty Ltd. The new company was a wholly owned subsidiary of Shark Ltd. (see Corporations Act for definition). Shark transferred its insurance department to the new company. The new company was running its business from premises leased from Shark Ltd.

Often, the board of directors of Shark Ltd were heard bragging that now they could access all the funds and profits of the new company, Safe Pty Ltd., without being responsible for any of its liabilities. Safe Pty Ltd had a policy to pay monthly dividends to Shark Ltd.

Shark Ltd also appointed all the directors of Safe Pty Ltd. In fact, two of the directors of Shark Ltd (Sam and Jack) were appointed as the only directors of Safe Pty Ltd. Shark Ltd usually devised the policies of Safe Pty Ltd and Sam and Jack implemented these policies. Shark Ltd also provided the initial capital needed for the business run by Safe Pty Ltd. to proceed. The employees in Safe Pty Ltd were allowed to use some of the financial records held by Shark Ltd to assess whether or not they should accept or deny an insurance application.

In 2009, the market suffered huge losses and as a result of this downturn a number of insurance claims were made. However, Safe Pty Ltd had insufficient money to cover all these claims and consequently, the company went under liquidation.

The policy holders would like to know if they can take action against Shark Ltd.

nnect Kapoor, Focus on Personal Finance 5th ed.: FINANCE FIN300 Summer 2017 instructions | help Question 22 (of 22) Save & Exit Submit What is the approximate market value of a bond that pays $150 interest each year if comparable Interest rates have dropped to 5%? O O $950 O $750 $3,000 $6,000QUESTION 13 What are the problematic characteristics of forward contracts that have led to the emergence of futures contracts? QUESTION 14 Why does the risk of default arise in forward contracts? QUESTION 15 What is meant by the liquidity of a forward contract? QUESTION 16 Explain why forward contracts are used primarily for hedging, whereas futures contracts are used primarily for speculation. QUESTION 17 Distinguish between a currency swap and an interest swap.Question 6 10 pts Which of the following statements regarding the balance sheet is INCORRECT? if\" The balance sheet reports long-term debt on the right-hand side. If\" The balance sheet reports the market values of assets, liabilities, and shareholders' equity. f\" The balance sheet provides a snapshot of a rm's nancial position at a given point in time. 5\"\" The balance sheet reports stockholders' equity on the right- hand side. Question 3 Some researchers who utilise Legitimacy Theory posit that organisations will attempt to operate within the terms of their 'social contract". What is a social contract? Question 4 In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, 'market forces' would be relied upon to encourage companies to do the 'right thing' (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations' products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the 'right thing' even in the absence of legislation). You are required to explain the decision of the government that no specific regulation be introduced from the perspective of: 1. Public Interest Theory 2. Capture Theory 3. Economic Interest Group Theory of regulation.